Monzo Bank Ltd · DRN-6068348

The complaint Mr M has complained about Monzo Bank Ltd (Monzo) declining his claim for money back. What happened As Mr M and Monzo are familiar with the background details of this complaint, I’ll only briefly summarise them here. It reflects my role of resolving disputes quickly with minimum formality. In June 2025, Mr M paid £109.95 for a linen suit to an online retailer, who I’ll refer to as R, using his Monzo debit card. The suit was successfully delivered to Mr M. But Mr M noticed the suit was damaged and of poor quality. So, Mr M complained to R about this. Initially R offered to make a 15% refund. Mr M rejected this offer saying he wanted to return the suit as it was damaged and get a full refund. R agreed, but on the condition Mr M paid for the return postage. Mr M thought this was unfair due to the cost. To resolve the dispute, R offered to either send a replacement suit and to make a full refund if this also arrived damaged or to make a 50% refund – both offers were made on the basis Mr M didn’t need to return the first suit. Unhappy with R’s offer, Mr M asked Monzo for help in getting a full refund. In summary, Mr M told Monzo he had made R aware he wanted to reject the goods and in accordance with the Consumer Rights Act 2015 (CRA), it was for R to pay for the cost of the goods being returned to them and for R to give him a full refund given the suit was faulty when he received it. Monzo raised a chargeback with Mastercard under the dispute condition 4853 – not as described or defective. R defended the claim saying the resolution they had offered to Mr M was in accordance with their terms and conditions. Ultimately, Monzo decided it was unlikely Mastercard would rule in Mr M’s favour if they proceeded to the final arbitration stage. So, they informed Mr M the chargeback was unsuccessful and had been closed. Unhappy with this outcome, Mr M raised a complaint with Monzo about how they’d dealt with the chargeback and the outcome. Monzo responded by saying they’d processed the chargeback correctly and in accordance with the scheme rules. Investigator’s outcome Because Mr M didn’t agree with what Monzo had said, he brought the complaint to the Financial Ombudsman. The Investigator didn’t uphold Mr M’s complaint. In summary, the Investigator said a chargeback was determined by the strict scheme rules. And while the Investigator appreciated why Mr M thought R was in breach of his statutory rights under the CRA, they said this legislation wasn’t included as part of the chargeback rules. Overall. The Investigator thought Monzo had acted fairly when deciding not to proceed with the chargeback following R defending the claim. Mr M didn’t agree with the Investigator’s outcome saying, in summary, he thought Monzo had failed to deliver a good outcome and had treated him unfairly, ‘when accepting a merchant’s defence that relies entirely on contractual terms which violate mandatory

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statutory consumer protections’. So, this complaint has come to me to make a final decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Mr M is correct when saying various legislation applies to the purchase of goods by a retail customer. What legislation applies is dependent on several factors. This includes, but isn’t limited to, whether the goods were bought in person or online, the cost and purpose of the goods and the means the consumer used to pay for the goods. In this instance, Mr M used his debit card to pay for the suit. This meant a chargeback was the means available to Monzo to help Mr M get back the disputed transaction amount. Monzo was unable to consider whether there had been any misrepresentation by R at the point of sale or any subsequent breach of contract under Section 75 of the Consumer Credit Act 1974 (S75 CCA) as he didn’t buy the goods using a credit card or a regulated credit agreement. For the same reasons, the Financial Ombudsman is also unable to consider this. Mr M believes that under the CRA he had a 30-day “short-term right to reject” the faulty goods from when they were delivered for a full refund and it was for R to pay any reasonable costs associated with the goods being returned to them. It’s my understanding the rights afforded to Mr M by the CRA would have applied to this sale. Potentially, this is something another body - such as Trading Standards or the Courts – would take into consideration if they were asked to consider the matter. But of importance here, is that it isn’t for me to decide if R dealt with Mr M, including whether R correctly applied the CRA. What I can consider, is how Monzo processed the chargeback for Mr M and check if they’ve followed the rules correctly and in a timely manner. The chargeback scheme A ‘chargeback’ is a way for a debit or credit card provider (Monzo) to reclaim money from the merchant’s (R’s) bank where there are certain problems with the purchase of goods or services by a consumer (Mr M). It isn’t a legal right and there’s no guarantee the card provider will be able to recover the money this way. It’s a voluntary scheme and the process must follow the scheme rules. As Mr M’s card was issued under the Mastercard brand, the Mastercard chargeback rules apply here. The scheme rules are written by Mastercard. Monzo must abide by the rules – which are strict, and time limits apply. The rules allow the merchant to either accept the dispute or provide evidence in defence of the chargeback. If an amicable conclusion can’t be reached, it’s Mastercard who decides the outcome of the dispute – not Monzo. Chargeback outcome Ultimately, Monzo decided not to proceed to the final arbitration stage because they thought it was unlikely Mastercard would rule in Mr M’s favour. Given the information that was available to them at the time, I appreciate why Monzo came to this conclusion. I say this because: • It isn’t disputed that Mr M bought a suit from R. What is in dispute is whether it was fair for R to require Mr M to pay for the cost of him returning the goods to them given they were faulty. • I appreciate why Mr M believes R should have either arranged for a prepaid return

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label to be sent to him or covered the cost of the return postage. In the circumstances, it’s my understanding this was a potential remedy under the CRA. But the CRA does not formally form part of the chargeback rules. • While chargeback can be used to resolve disputes over faulty or undelivered goods, it’s distinct from legal rights (unlike S75 CCA). Monzo had to apply the rules as written – they couldn’t change or ignore them. Ana as I set out above, they’re strict and written by the scheme provider. In this instance, the relevant rule says when goods are delivered faulty or not as described, a merchant is generally expected to accept a return and provide a full refund in line with their returns policy. • Mr M didn’t want a replacement suit (irrespective of whether it arrived in perfect condition). I appreciate why this was the case given Mr M thought it was of poor quality. However, as part of their defence, R provided a copy of their terms and conditions. Monzo determined the refund policy made no promise of ‘free returns’ under any circumstance. Rather, Monzo was satisfied R’s offer to send a replacement suit to Mr M without the need for him to first return the faulty suit to them, was in accordance with R’s terms and conditions. Monzo also noted R had offered to either refund the full cost of the suit following Mr M returning the first suit to them or to refund 50% without the need for him to return it. So, I understand why Monzo believed R had adhered to their returns policy. As a chargeback is a voluntary scheme there was no requirement for Monzo to progress it to the final arbitration stage. Having said that, I’d have expected them to do so, if there had been a good prospect of Mastercard ruling in Mr M’s favour. For the reasons I’ve explained above, I appreciate why Monzo didn’t think this was likely. Based on what I’ve seen, I think Monzo acted fairly when deciding to close the chargeback when they did. Overall, I think Monzo correctly followed the scheme rules and processed the chargeback fairly and in a timely manner without any undue delays. I appreciate this outcome will come as a disappointment to Mr M as he thinks Monzo could have done more to help him. But in the circumstances, the help Monzo could provide was limited and I’m satisfied they acted to deliver a good outcome for Mr M. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 15 April 2026. Carl Bibby Ombudsman

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